Assume that a law has been proposed that would make price stability the sole goal of monetary

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Assume that a law has been proposed that would make price stability the sole goal of monetary policy. Suppose such a law were passed.

a. How would the central bank respond to an event that contracted AD?

b. How would the central bank respond to an event that caused an adverse shift in SRAS?

c. In each case, is there another monetary policy option that would lead to greater stability in output?

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Economics

ISBN: 9781473768543

5th Edition

Authors: Gregory Mankiw, Mark P. Taylor

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Question Posted: Apr 26, 2024 02:01 AM

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Assume that a law has been proposed that would make price stability the sole goal of monetary

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a If a law were passed making price stability the sole goal of monetary policy and an event occurred that contracted aggregate demand AD the central b...View the full answer

Economics

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